He is being sued by Taxpayers' Union co-founder Jordan Williams over comments he made in a widely distributed leaflet last year.

The jury heard allegations earlier in the trial that Mr Craig had sent Ms MacGregor a text that said: "I slept well because I dreamt I was between your legs".

Colin Craig, left, and Rachel MacGregor Photo: Supplied

Mr Craig said Mr Williams had told a number of influential people, including former Conservative Party chief executive Christine Rankin and other party board members, that he had sent such a text to Ms MacGregor the day before she resigned.

But Mr Craig said that was not true.

"I sent no such message nor did I send any similar message," he said.

Mr Craig denied allegations that he sexually assaulted Ms MacGregor and that he forced her into debt because he did not pay her.

Kiss was consensual - Craig

Mr Craig also spoke about allegations of an incident that occurred on election night in 2011.

Mr Craig said he did and that he also regretted their relationship had became too close, and he took his share of the responsibility for that.

Curtains in party office not 'dodgy' - Craig

Mr Craig also told the jury there was nothing dodgy about putting curtains up in a Conservative Party office.

The jury heard earlier in the trial that a curtain in a Conservative Party office would be closed when Mr Craig and his press secretary were in there together.

But Mr Craig has explained that the party had set up a campaign office, but it did not have curtains or blinds.

They decided to put curtains up to protect information, such as campaign strategies, that were written on whiteboards.

"The allegations was that somehow that was a dodgy thing to do," Mr Craig said.

Mr Craig said he still genuinely believed Mr Williams, blogger Cameron Slater and former Conservative Party board member John Stringer were "three schemers" who had plotted to bring him down as the leader of a political party.

Mr Craig said that because of the false allegations about his relationship with Ms MacGregor, which he believed were being circulated by the three men, he was being repeatedly slammed in the mainstream media and on blogs.

Mr Craig said his political reputation had been destroyed by a campaign to attack him and he ultimately had to step down as the leader of the Conservative Party.

He said he wanted to defend himself and restore his reputation. He said he thought carefully about how to do that, given the confidential settlement he had reached with Ms MacGregor.

Mr Craig said he ultimately decided to publish the leaflet, titled Dirty Politics and Hidden Agendas, in which he outlined the allegations that he said Mr Williams should not have made.

Who's who?

Jordan Williams - The plaintiff in the case and executive director of the Taxpayers' Union. He has accused Colin Craig of defaming him in a leaflet that was sent to 1.6 million households around the country in July 2015.

Colin Craig - The defendant and former leader of the Conservative Party. He stepped down as leader in mid-2015 amid renewed speculation about his relationship with his former staffer, Rachel MacGregor.

Rachel MacGregor - The woman at the centre of the allegations and Mr Craig's former press secretary. She alleges she was sexually harassed by Mr Craig over a long period of time. She quit her job two days before the 2014 election over a pay dispute.

Peter McKnight - Mr Williams' lawyer.

Stephen Mills - Mr Craig's lawyer. A defamation expert.

Justice Katz - The High Court judge presiding over the trial.

John Stringer - Former Conservative Party board member. Gave evidence that there was no smear campaign against Mr Craig. Also said Mr Craig had told board members there was nothing going on with Ms MacGregor.

Christine Rankin - Former Conservative Party chief executive and candidate for Epsom in the 2014 election. Told the court she had thought Mr Craig was a moral man who could bring integrity into New Zealand politics.